Attorney General James Secures More Than $480,000 and Debt Relief for New York Homeowners

October 23, 2026

NEW YORK - New York Attorney General Letitia James today secured more than $480,000 and additional debt relief for New York homeowners from a group of debt buyers who attempted to collect expired mortgage payments from homeowners facing foreclosure. An investigation by the Office of the Attorney General (OAG) found that a group of companies, including BCMB1 Trust; First Age, LLC; NS194, LLC; Second Start, LLC; Southern MBA Trust, and their affiliates bought thousands of defaulted mortgage loans throughout the state, most of which originated in the years leading up to the 2008 financial crisis. Many of these loans were second mortgages that had long gone unpaid because borrowers had modified their primary mortgages during the financial crisis and lenders had stopped trying to collect payments on them. The OAG's investigation found that the debt buyers violated New York laws by filing foreclosure lawsuits with demands to repay debt that was no longer legally collectable. As a result of OAG's investigation, the companies will pay more than $480,000 in penalties and restitution to homeowners and must drop all demands for expired mortgage payments in any ongoing foreclosure case.

"No New Yorker should face losing their home to a predatory company demanding mortgage payments that have long since expired," said Attorney General James. "These companies are illegally demanding money from homeowners who worked hard to keep their homes during the Great Recession. I will not tolerate illegal schemes that put New Yorkers' homes at risk, and my office will ensure that everyone who was cheated by these companies gets their money back."

In the years leading up to the 2008 financial crisis, mortgage lenders often offered potential homebuyers financing for the entire purchase of a home by creating two mortgages, a primary mortgage for 80 percent of the price of the home, and a second mortgage with a higher interest rate for the remaining 20 percent. During the Great Recession, many homeowners who struggled to make their mortgage payments were able to modify their primary mortgage. However, companies that held the second mortgages often made no attempt to collect the debt if homeowners fell behind because property values had fallen so far that the loans were essentially worthless. As a result, many second mortgages remained unpaid for years without homeowners receiving mortgage statements or other communications about their loans. These homeowners had no way to make payments or resolve their debt, even as they were making their monthly payment on their primary mortgage and rebuilding equity in their homes.

The OAG's investigation found that beginning in 2019, the debt buyers being investigated collectively acquired more than 3,000 of these "zombie" mortgages in New York. Most of these loans were second mortgages originated in the years leading up to the 2008 financial crisis. The OAG found that these companies filed more than 140 foreclosure lawsuits in their attempts to collect on long-defaulted second mortgages. Many of these lawsuits sought repayment of both the full principal balance of the loans and interest going back as far as 12 years, in violation of New York's statute of limitations that prevents lenders from collecting on past-due loan payments that are more than six years old.

As a result of OAG's investigation, the debt buyers must pay $240,000 in penalties and provide more than $242,000 in restitution to consumers who paid or agreed to pay back debt that had expired under the statute of limitations. The companies are also barred from seeking to collect expired debt payments in the future and must amend their demands in existing foreclosure cases to exclude any expired debt.

Attorney General James asks any homeowner who believes they have been subject to an improper foreclosure to file a complaint online with the OAG's Consumer Frauds and Protection Bureau or call the office at 1-800-771-7755.

This matter was handled by Assistant Attorneys General Franklin Romeo and Dami Obaro, under the supervision of Deputy Bureau Chief Laura J. Levine and Bureau Chief Jane M. Azia. The Consumer Frauds and Protection Bureau is part of the Division of Economic Justice, which is led by Chief Deputy Attorney General Chris D'Angelo and is overseen by First Deputy Attorney General Meghan Faux.